Why is the Russel 2000 a useful composite to follow? The Russel is useful because it represent the weakest index composed of heavily indebted companies (debt up to 50 times assets) who must roll over massive existing debt and borrow new debt with a fed fund rate of 3.75- 4 percent, a rate that was less than 0.1% one year ago. Below is a graph of the Russell 2000 in weekly time units dating from 24 January 2022, the beginning of the the third 11 month fractal of the current March 2020 8/17/11 month series. (8/16/11 months for the Wilshire). The terminus of the 11 months will conclude a 31-32/68/68 monthly series starting with ending monthly low in February 2009 or the absolute low in March 2009. (See previous posting.) The terminus also concludes an interpolated 1982 first and second fractal series of 13/29 years. Contained within the 1982 first and second fractal series is the 8 November 2021 Wilshire and Bitcoin in USD peak valuation occurring in 90th year of the third 90 year fractal of a US 1807 36/90/90/54 fractal series.

The above graph depict a x/2-2.5xy/2x/1.5y :: 7/15/14/8 of 10 week fractal series. The green 1st fractal is composed of a 2/4/3 week series. The 2nd orange fractal is composed of a 3/8/6 week series. The third black and 4th purple fractal series is composed a 5/10/10 weeks of which the 4th purple fractal is composed of a 2/4/4/expected 3 week series. Notice the nonlinear lower valuation gap between week 14 and 15 of the orange underlined 2nd 15 week fractal. The nonlinear gap between 2x and 2.5x characterizes second fractals as described in the 2005 original website main page. The daily fractal series correlating to the weekly series is 31/71/64/expected 44 days. The 64 days of the third 14 week fractal underlined I black is composed of a 19/46 day with a nonlinear gap observable on the daily charts between day 45 and 46 of the 46 day second fractal. The final expected 44 day fractal starting 16 September 2022 is composed of an interpolated 8(2/4/4 downgoing )/18/20 day fractal series. Interpolated mathematical fractal series like the individual nation-state economies making up the global asset-debt system are elegantly interlocking. A 39 day fractal series starts on 23 October 2022 and is composed of a 6/15/12/9 day fractal series with an expected low on 16 November 2022 barring trading halts.

Review of the Asset-Debt systems two fractal growth and decay mathematical patterns:

 An ‘A’ type 4-phase fractal series : xy/2-2.5xy/2-2.5xy/1.5xy (the fourth subfractal unit ranges from 1.4xy to 1.6xy)

First xy subfractal unit: time length defined by nadir to nadir  point time  trading saturation valuations

Second 2-2.5xy subfractal unit: time length defined  by nadir to point time nadir trading saturation valuation with a nonlinear lower low drop occurring between the 2x to 2.5x time frame

Third 2-2.5xy subfractal unit: time length  defined by concluding Second subfractal point time nadir valuation to final point time peak valuation trading saturation

Fourth 1.5xy subfractal unit: time length defined by point time  third subunit peak valuation  to point time nadir trading saturation valuation

and 

a ‘B’ type 3-phase fractal series: xy/2-2.5xy/1.5-2.5xy.  

The first, second, and third subfractal units of the 3-phase fractal pattern are all defined by the time length defined by nadir to nadir  point time  trading saturation valuations

Why the Great Nonlinear 2022 Crash? 

While not 1929 and not 2008, this crash does represent great nonlinearity within the US 1807: 36/90/90/54 year asset-debt macroeconomic cycle. This  historical super bubble asset valuation was inflated since 2020 via unprecedented world central bank covid related money printing, low to negative interest rates, and facilitated money lending programs.  With resulting consumer inflation at 40 year highs, the bubble is being given the largest of needle pricks   via an 220 year unprecedented acceleration of central bank money tightening and sharply rising interest rates. This time it is really different. A historical nonlinear devaluation of global assets is expected to be representative of that difference. 

From the 90 year 1932-2021 Third Fractal  November 2021 Wilshire/Bitcoin high: 
the simplest mathematical y/2y/2y monthly decay fractal series is this:  3/6/6 months (with lower or higher low valuation at 3/6/6/4 months – likely higher with an earlier central bank QT to QE pivot than anticipated).

Composite Equity Valuations 2009 To Present:

1st fractal: From the ending Feb 2009 monthly low: 6/14/14 months:  32 months

2nd fractal 15/35(8/17/12)/20(6/15) months = 68 months
Terminal Valuation distortions caused by Brexit world banks’ large QE/lowered interest rates …

3rd fractal using a 15 (3/7/7) month upgoing base of the (6/15) month terminal 2nd fractal : (15)//36 (7/15/16)//33 (7/17/11)  = 68 months (with lower or higher low at month 71 (15)/36/36 months.

The final 11 months of the 7/17/11 month fractal are composed of:

7/15/13/10 weeks or
31/71/60/43-44 days (with an ideal base for a 71 day second fractal of 28+ days)

The final 43-44 day decay fractal is composed of two sub fractal decay series: 2/4/4/3 days and 5/12/13/7-8 days ending Wednesday or Thursday 9/10 November 2022 with a potential longer daily time frame because of  trading halts. A potential low of 14470 to 15370 is possible for the Wilshire.

Final 7-8 day 4th fractal decay series:
From the 1 November 2022 3rd fractal 13 day (key reversal day)  (5/12/13 day) high : 2/4/3 to 4 days for a 5/1213/7-8 day series.

The daily timing of the crash of the composite US (and European, and Japanese) equity crash and cryptocurrency crash coincides with the Chinese property, banking, and composite equity crash.

Current Wilshire Composite fractal modeling observations:

New 24 January 2022 first fractal base: 35 day vice 31 day base
First Fractal starting January 24 2022 ending 14 March 2022 :

composed of 2 sub fractals: 

5/12/7 days and 3/8/5 days 

Second fractal 14 Mar thru 14 July – composed of two sub fractals:

8/18/18 days and 9/19/19 days (last 19 days are up going) 86 days

Third fractal 14 July to 7/8 November composed of two sub fractals

9/21/23 days and 5/11/12/2 of 7-8 days (total 82-83 days )

Here the final third subfractal 2.5xy lower high saturation peak valuation xy/2.5xy/2.5xy falls in the last 2xy-2.5xy time frame of the third subfractal followed by nonlinear decay also (efficiently) contained in the last 2xy-2.5xy third subfractal time frame.

This morning the Hangseng Index fell below 15k. The HSI appears to be following a 23 August 2022 9/18/18/5 of 10-11 day decay fractal series :: (y/2y/2y/1.5y) which will likely take it below its 2008 nadir valuation. The Chinese equity pattern matches the end timing for the Wilshire and Bitcoin in USD decay fractal patterns. The asset-debt macroeconomic system is globally interlocking. Bad debt and overvalued assets are undergoing nonlinear liquidation.

The Asset-Debt Macroeconomic system’s 1807 US hegemonic 36/90/90/54 year :: Great Fractal Cycle

1. The Efficient Market Saturation Time-based Trading to Peak and Nadir Valuation Theory of Quantitative Fractal Valuation progression:

The central banks expand and contract available system debt/money to sustain the asset-debt macroeconomic system with the bank’s defined boundary conditions of 1. unacceptable unemployment vice 2. unacceptable consumer inflation (and likely unacceptable consumer asset devaluation). The asset-debt macroeconomic system then integrates  the central bank’s manipulation of credit/money expansion/contraction via interest rates and broader measures of  QE/QT  and self-orders and self-assembles asset valuations into the most efficient time-based mathematical trading saturation growth-to-peak valuation fractals, and trading saturation decay-to-nadir valuation fractals. Within major valuation growth trends there is periodic countertrend decay  and vice-versa. These time-based saturation trading valuation fractals are seen on minutely, hourly, daily, weekly, monthly, and yearly unit scales. 

2. Two simple self-ordering asset valuation time-based fractal patterns represent the most efficient pathways to trading saturation peak valuations and nadir valuations. These recurrent fractals pathways confer upon the complex macroeconomic asset-debt system the characteristics of a patterned science. The two time-based fractal patterns are:

An ‘A’ type 4-phase fractal series : xy/2-2.5xy/2-2.5xy/1.5xy (the fourth subfractal unit ranges from 1.4xy to 1.6xy)

First xy subfractal unit: time length defined by nadir to nadir  point time  trading saturation valuations

Second 2-2.5xy subfractal unit: time length defined  by nadir to point time nadir trading saturation valuation with a nonlinear lower low drop occurring between the 2x to 2.5x time frame

Third 2-2.5xy subfractal unit: time length  defined by concluding Second subfractal point time nadir valuation to final point time peak valuation trading saturation

Fourth 1.5xy subfractal unit: time length defined by point time  third subunit peak valuation  to point time nadir trading saturation valuation

and 

a ‘B’ type 3-phase fractal series: xy/2-2.5xy/1.5-2.5xy.  

The first, second, and third subfractal units of the 3-phase fractal pattern are all defined by the time length defined by nadir to nadir  point time  trading saturation valuations

Observational Empirical examples of ‘A’, the 4-phase series

Yearly Fractal units: Both the Wilshire and Bitcoin in USD reached a daily average high valuation on 8 November 2021. These high valuations occurred in the 90th year of a US 1807 36/90/90/54 year fractal series with valuations lows in 1842-43, 1932, and an expected low in 2074. 

Monthly Fractal units: starting from the March 2009 low:5/12/10/7 months

Monthly Observational Empirical composite equity valuation examples of ‘B’, the 3-phase series: Sequentially from the ending low trading valuation of the March 2009 4-phase 5/12/10/7 month fractal series: 3/8/6 months, 8/17/16 months, and 11/26/16 months ending in March 2020.  

 Daily observational examples of the ‘B’ type series: from Jan 2020 to March 2020 a 6/15/15 day 3 phase decay fractal series can be observed.

3.  Current valuation modelling using the above two self-ordering efficient   laws of of the Asset-Debt system:

Equity Composite Asset class 

Starting March 2020, a  ‘B’ type 3-phase 8/16/10 of 11-16 month fractal  series is observable. This fractal series is consistent with the timing of central banks’ extraordinary QE response to Covid  and unemployment and later extraordinary QT response to the consumer inflation brought about by QE. The 16 month second subunit contains  the 90th year peak valuation of the 8 November 2021 90 year  third subfractal of the US 1807 36/90/90/54 year  ‘a’ type 4-phase fractal series.

The final 11-16 month decay (8/16/10 of 11-14) starts on 24 January 2022 and is  consistent with an evolving  7+/19/17 of 18 week (xy/2-2.5xy/2.5xy) ‘A’ type 3-phase fractal pattern which corresponds to a 35/86/82-83 day fractal series with a low valuation expected on 7-8 November 2022.

US Debt market: (Debt as an Asset)

The US Debt (Debt-as-Asset)Market had  its sharpest 10 and 1/2 month valuation decline dv/dt(squared)  since 1794 

Using the debt market’s inverse parameter: The US Ten Year Notes rise in interest rates (QT) (currently 4.01 %) from 1 August 2022 is  observed to be following  a 14/33/20 of 26/20 days with an expected transient peak interest rate on 7-8 November 2022 with trending declining interest rates to about December 4- 8 2022.  The current rise in the US Ten Year Note interest rates dates from March 2020 and is following a 7/16/11 of 13-16 rising interest rate monthly pattern likely part of a  Type A 4 phase 7-/16/13-14/10 month with declining interest rates in the last ten months consistent with an economic recession.